Electrolux to put in Rs 500 crore into Videocon
06 July 2005
AB Electrolux, ailing Swedish white goods company,
plans to put in funds to the tune of Rs 500 crore into
Indian consumer durables major, Videocon Industries. The
latter is taking over the manufacturing facilities of
its Indian subsidiary, Electrolux India.
Videocon will use the Rs 500 crore cash to retire the Indian subsidiary's debts and will be given compensation to the tune of Rs 160 crore for tax incentives that may not accrue to Videocon following the sale of the Electrolux plant in Boutibori, Pune. It's not clear if the Rs 160 crore is part of the Rs 500 crore.
Videocon is expected to get the Kelvinator brand on a 25-year lease with no royalty payment, while the Electrolux brand will be given on a five-year lease where some royalty will be paid. The deal also involves Videocon becoming a major original equipment (OE) supplier for Electrolux's global requirements.
Electrolux is focusing on India as a low-cost manufacturing base for its global requirements.